UNAUDITED LAKE COUNTY DISTRICT SCHOOL BOARD MANAGEMENT S DISCUSSION AND ANALYSIS

Transcription

1 LAKE COUNTY DISTRICT SCHOOL BOARD MANAGEMENT S DISCUSSION AND ANALYSIS As management of the District School Board of Lake County, Florida, (the District), we offer readers of the District s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with our financial statements. Financial Highlights Key financial highlights for the fiscal year are as follows: The assets and deferred outflows of the District exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $353,992,296. The District s total Net Position increased by $12,327,988. As of the close of the current fiscal year, the District s governmental funds reported combined fund balances of $76,980,396, a decrease of $2,781,525 in comparison with the prior fiscal year. The District s government-wide revenues totaled $400,406,826, of which general revenues totaled $374,188,948, or 93.4 percent of all revenues. In the prior fiscal year, general revenues totaled $ 354,778,384, or 93.2 percent. At the end of the current fiscal year, unassigned fund balance for the General Fund was $12,162,931 or 4.08 percent of total General Fund Revenues. The unassigned fund balance is available for spending at the District s discretion. The District s total long-term liabilities increased by $12,596,221 or approximately 3.3 percent during the current fiscal year. The key factor in this increase was the increase of the net pension liability and other non-capital long-term debt of $101,463,223 and a net decrease of $88,867,002 from the repayment and restructuring of outstanding debt. A complete discussion of all long term liabilities are included in the notes to the financial statements, note 2H. Overview of the Financial Statements The annual financial report consists of three parts: management s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District. The first two statements are government-wide financial statements that provide both short-term and long-term information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District s operations in more detail than the government-wide statements. Page 12

2 The governmental funds statements tell how basic services, such as regular and special education, were financed in the short-term, as well as what remains for future spending. The proprietary funds statements offer short-term and long-term financial information about the activities the District operates as internal service funds, such as selfinsurance. The fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others. Major Features of the Government-wide and Fund Financial Statements Scope Required Financial Statements Government-wide Statements Entire District (except fiduciary funds). Statement of Net Position Statement of Activities Fund Financial Statements Governmental Funds Proprietary Funds Fiduciary Funds The activities of the District Activities the District Instances in which that are not proprietary or operated similar to the District fiduciary, such as delivery of private businesses administers instruction and building resources on maintenance. behalf of someone else, such as student activity Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balance. Statement of Net Position Statement of Revenues, Expenses and Changes in Fund Net Position funds. Statement of Fiduciary Assets and Liabilities Accounting Basis and Measurement Focus Type of Asset/Liability Information Type of Inflow / Outflow Information Accrual accounting and economic resources focus. All assets and liabilities, both financial and capital, short-term and long-term. All revenues and expenses during the year, regardless of when cash is received or paid. Modified accrual accounting and current financial focus. Generally, assets expected to be used and liabilities that come due during the year or soon thereafter; no capital assets or long-term liabilities are included. Revenues for which cash is received during as soon after the end of the year; expenditures when goods or services have been received and the related liability is due and payable. Statement of Cash Flows Accrual accounting and economic resources focus. All assets and liabilities, both financial and capital, short-term and long-term. All revenues and expenses during the year, regardless of when cash is received or paid. Accrual accounting and economic resources focus. All assets and liabilities, both financial and capital, short-term and longterm; funds that do not currently contain capital assets, although they can All additions and deductions during the year, regardless of them cash or received or paid. The financial statements also include notes that explain information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of the District s budget for the fiscal year. Page 13

3 Government-Wide Financial Statements Reporting the District as a Whole The government-wide financial statements provide both long-term and short-term information about the District s overall financial status. The subsequent statements are fund financial statements that focus on individual parts of the District and provide greater detail of the District s operations than the government-wide statements. Additionally, the basic financial statements include notes, which explain some of the information in the statements and provide more detailed data. The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The statement of Net Position presents information on all of the District s non-fiduciary assets and liabilities, with the difference between the two reported as Net position. Over time, increases or decreases in Net Position may serve as useful indicators of whether the financial position of the District is improving or deteriorating. The statement of activities provides information showing how the government s Net position changed during the most recent fiscal year. All changes in Net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in the future fiscal periods (e.g., uncollected taxes and earned but unused vacation and sick leave.) Both of the government-wide financial statements distinguish functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the District include such functions as instruction, pupil personnel services, administration, pupil transportation, maintenance, and other items. The business-type activities of the District include the Extended Learning Center Program. The government-wide financial statements include not only the District itself (known as the primary government), but also 8 charter schools and the Educational Foundation of Lake County, Inc., for which the District is financially accountable. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The financial data reported for the Charter Schools and the Foundation was derived from individual audited financial statements on file in the District s administrative offices. The Financing Corporation for the School Board of Lake County, Florida, Inc. (Financing Corporation), although also legally separate, was formed to facilitate financing for the acquisition of facilities and equipment. Due to substantive economic relationship between the District and Financing Corporation, the Financing Corporation has been included as an integral part of the primary government. The government-wide financial statements can be found on pages 23 through 25 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and Page 14

4 local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be put into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains 11 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Special Revenue Food Service, and one Capital Projects fund which are considered to be major funds. Data from the other 8 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements found on pages 95 through 98 of this report. The basic governmental fund financial statements can be found on pages 26 through 31 of this report. Proprietary Funds. The District maintains two different types of proprietary funds. The enterprise fund is used to report the same functions as business-type activities in the government-wide financial statements. The District uses the enterprise fund to account for its Extended Learning Center (before-and after-school child care) Program. Internal service funds are an accounting device used to accumulate and allocate cost internally among the District s various functions. The District uses three internal service funds to account for its self-funded health insurance program, employee flexible spending program, and copy center. Because these services predominantly benefit the governmental rather than the business-type functions, they have been included within the governmental activities in the government-wide financial statements. Individual fund data for each of these internal service funds is provided in the form of combining statements found on pages 108 through 110 of this report. Proprietary funds provide the same type of information as the government-wide financial statement, only in more detail. The proprietary fund financial statements provide separate information for the Extended Learning Center Program. The Extended Learning Centers provide before- and after-school care to elementary and middle school students enrolled in Lake County Schools. Expenses incurred for the operation of these programs are paid totally by fees collected for services. The basic proprietary fund financial statements can be found on pages 32 through 34 of this report. Fiduciary Funds. Fiduciary funds are used to report assets held in a trustee or fiduciary capacity for the benefit of external parties, such as student activity funds. Fiduciary funds Page 15

5 are not reflected in the government-wide statements because the resources are not available to support the District s own programs. In its fiduciary capacity, the District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes. The Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position can be found on pages 35 through 36 of this report. Notes to the Basic Financial Statements The notes provide additional information that is essential to fully understand the data provided in the government-wide and fund financial statements. The notes to basic financial statements can be found following the basic financial statements on pages 37 through 86 of this report. to the basic financial Required Supplementary Information The District adopts an annual budget for its General Fund. A budgetary comparison schedule and required note disclosure have been provided for the General Fund and the Special Revenue Food Service Fund on pages 87 through 88 to demonstrate compliance with this budget. In addition, this report also presents required supplementary information concerning the District s net pension liability and its progress in funding its obligation to provide other postemployment benefits to its employees on pages 89 through 91. Notes to the Required Supplementary Information The notes provide additional information that is essential to fully understand the data provided in the required supplementary information. The notes to required supplementary information can be found following the basic financial statements on page 92 of this report. Government-Wide Financial Analysis As noted earlier, Net position may serve over time as a useful indicator of a government s financial position. In the case of the District, assets and deferred outflows exceed liabilities and deferred inflows by $352,729,093 at June 30, By far, the largest portion of the District s Net position reflects its Net Investment in Capital Assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to educate the students of Lake County, Florida; consequently, these assets are not available for future spending. Although the District s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Page 16

6 The following is a summary of the District s Net Position as of June 30, 2016 compared to the Net Position as of June 30, Governmental Activities Business-Type Activities June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Current and Other Assets $ 113,209,714 $ 113,046,788 $ 1,317,817 $ 1,221,151 $ 114,527,531 $ 114,267,939 Capital Assets $ 647,142,176 $ 660,286,068 $ 647,142,176 $ 660,286,068 Total Total Assets $ 760,351,890 $ 773,332,856 $ 1,317,817 $ 1,221,151 $ 761,669,707 $ 774,554,007 Deferred Outflow of Resources $ 36,394,474 $ 27,617,147 $ - $ - $ 36,394,474 $ 27,617,147 Current Liabilities $ 340,714,543 $ 31,229,146 $ 56,416 $ 91,912 $ 340,770,959 $ 31,321,058 Noncurrent Liabilities $ 394,689,271 $ 382,093,050 $ 394,689,271 $ 382,093,050 Total Liabilities $ 735,403,814 $ 413,322,196 $ 56,416 $ 91,912 $ 735,460,230 $ 413,414,108 Deferred Inflow of Resources $ 15,354,547 $ 47,092,738 $ 15,354,547 $ 47,092,738 Net Position Net Investment in Capital Assets $ 404,304,817 $ 394,523,506 $ 404,304,817 $ 394,523,506 Restricted $ 61,651,252 $ 62,358,146 $ 61,651,252 $ 62,358,146 Unrestricted (deficit) $ (113,226,976) $ (116,346,583) $ 1,263,203 $ 1,129,239 $ (111,963,773) $ (115,217,344) Total Net Position $ 352,729,093 $ 340,535,069 $ 1,263,203 $ 1,129,239 $ 353,992,296 $ 341,664,308 A portion of the District s Net position, $61,651,252, represents resources that are subject to external restrictions on how they may be used. A decrease of $706,894 in restricted net position reported in connection with the District s governmental activities was the result of debt service payments and restructuring during the fiscal year. The remaining deficit net position, $113,226,976, reflects the shortfall that the District would have faced in the event that it would have had to liquidate all of its non-capital liabilities at June 30, The most significant liabilities (claims) against the unrestricted assets include the pension liability of $118,511,301, compensated absence liability of $16,157,799, and the other post-employment benefits (OPEB) liability of $10,337,448. Of the compensated absence liability, approximately $14,757,799, will be due more than one year from the date of the financial statements and does not require the use of current funds. Page 17

7 The key elements of the changes in the District s Net position for the fiscal years ended June 30, 2016 and June 30, 2015 are as follows: Governmental Business-Type Total Activities Activities June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Revenues: Program Revenues Charge for Services $ 4,682,454 $ 5,053,811 $ 2,994,167 $ 2,855,793 $ 7,676,621 $ 7,909,604 Operating Grants and Contributions 16,293,289 15,812,980 16,293,289 15,812,980 Capital Grants and Contributions 2,247,968 2,283,228 2,247,968 2,283,228 General Revenues: Property Taxes 126,733, ,491, ,733, ,491,820 Other Taxes 14,028,543 14,021,477 14,028,543 14,021,477 Grants and Contributions (FEFP etc.) 223,603, ,519, ,603, ,519,225 Unrestricted Investment Earnings 199,849 30, ,988 31,065 Miscellaneous 9,623,905 10,714,797 9,623,905 10,714,797 Total Revenues 397,412, ,928,125 2,994,306 2,856, ,406, ,784,196 Expenses: Instruction 203,632, ,588, ,632, ,588,155 Pupil Personnel Services 17,203,453 17,012,506 15,844,531 17,012,506 Instructional Media Services 3,465,386 3,438,954 17,203,453 3,438,954 Instruction and Curr Development 11,637,502 8,146,058 11,637,502 8,146,058 Instructional Staff Training Services 9,970,986 9,204,244 9,970,986 9,204,244 Instruction Related Technology 1,297,717 1,385,748 1,297,717 1,385,748 Board of Education 761, , , ,594 General Administration 1,888,123 1,545,354 1,888,123 1,545,354 School Administration 18,103,177 17,204,641 18,103,177 17,204,641 Facility Services 6,087,331 6,280,902 6,087,331 6,280,902 Fiscal Services 1,855,957 1,644,580 1,855,957 1,644,580 Food Services 19,176,323 18,600,056 19,176,323 18,600,056 Central Services 6,207,037 5,844,099 6,207,037 5,844,099 Pupil Transportation Services 15,844,531 16,398,971 15,844,531 16,398,971 Operation of Plant 25,263,904 24,535,385 25,263,904 24,535,385 Maintenance of Plant 8,052,999 7,277,443 8,052,999 7,277,443 Administrative Technology Services 3,593,785 3,502,836 3,593,785 3,502,836 Community Services 103,969 91, ,969 91,030 Interest on Long-Term Debt 9,894,088 10,121,367 9,894,088 10,121,367 Depreciation - Unallocated 21,178,576 21,903,645 21,178,576 21,903,645 Extended Learning Center Program 2,860,342 2,654,798 2,860,342 2,654,798 Total Expenses 385,218, ,498,568 2,860,342 2,654, ,457, ,153,366 Excess (Deficiency) before Transfers 12,194,024 9,429, , ,273 12,327,988 9,630,830 Transfers 336,732 (456,278) - (119,546) Change in Net Position 12,194,024 9,766, ,964 (255,005) 12,327,988 9,511,284 Net Position, Beginning of Year 340,535, ,768,780 1,129,239 1,384, ,664, ,153,024 Net Position, Ending $ 352,729,093 $ 340,535,069 $ 1,263,203 $ 1,129,239 $ 353,992,296 $ 341,664,308 The District s Net Position increased by $12,194,024 during the current fiscal year. Governmental Activities. Governmental activities increased the District s Net Position by $12,194,024. For the most part, increases in expenses closely paralleled inflation and reduced growth in the number of students. Business-Type Activities. Business-type activities increased the District s Net Position by $133,964. Page 18

8 Financial Analysis of the Government s Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Major Governmental Funds The focus of the District governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the District s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District s governmental funds reported combined ending fund balances of $76,980,396, a decrease of $2,781,525 in comparison with the prior fiscal year. This is mainly due to repayment of debt. As more fully discussed in the Notes to Basic Financial Statements, the Governmental Accounting Standards Board (GASB) has issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54) to provide a more structured classification of fund balance and to improve the usefulness of fund balance reporting to the users of the District s financial statements. The reporting standard establishes a hierarchy for fund balance classifications and the constraints imposed on the uses of those resources. GASB 54 provides for two major types of fund balances, which are non-spendable and spendable. In addition to the non-spendable fund balance, GASB 54 has provided a hierarchy of spendable fund balances, based on spending constraints, as follows: Restricted Committed Assigned Unassigned The General Fund is the chief operating fund of the District. At the end of the current fiscal year, unassigned fund balance of the General Fund was $12,162,931 while total fund balance reached $15,518,916. As a measure of the General Fund s liquidity, it may useful to compare both unassigned fund balance and total fund balance to total revenues. Unassigned fund balance represents approximately 4.08 percent of total General Fund revenues, while total fund balance represents approximately 5.2 percent of that same amount. The remainder of fund balance is spendable subject to the level of restriction. The assigned fund balance includes encumbrances of $1,557,963 which are not available for new spending because it has already been assigned to liquidate contracts and purchase orders outstanding. Funds related to specific State required carryover programs of $189,772 are reported as restricted; inventory and prepaid instructional material items totaling $1,608,250 are reported as non-spendable. Special Revenue Fund Food Service is used to account for the financial resources of the School Food Service Programs. Included in this fund are the revenues from the Federal Student Nutrition Cluster and funds collected locally through on-site sales in the cafeterias of the schools. The fund balance is monitored and restricted to an account substantially equal to 3 months operating expenditures. Page 19

9 The Capital Projects - Other Capital Projects Fund is used to account for the financial resources generated by various capital funding sources. Included in this fund were Certificate of Participation Proceeds, Impact Fees, and other capital outlay-funded projects. The fund balance for this fund at the fiscal year end, which is restricted for capital projects, was $35,876,820, a decrease of $211,344 from the prior fiscal year. Proprietary Funds The District s proprietary funds provide the same type of information as business-type activities found in the government-wide financial statements. General Fund Budgetary Highlights During the fiscal year, the District s revenue and expenditure projections remained similar to original budgeted amounts. The actual change in fund balance of the General Fund was more than the original budgeted change by approximately $3.27 million. This was due to a reapportionment of state funding that reduced the per student base funding during the fiscal year and transfers in from Capital Outlay funds to support capital expenditures made through the General Fund. Capital Assets and Debt Administration Capital Assets. The District s net investment in capital assets for the governmental activities as of June 30, 2016, amounted to $647,142,176 (net of accumulated depreciation). This investment in capital assets includes land; improvements other than buildings; buildings and fixed equipment; furniture, fixtures and equipment; motor vehicles; audio visual materials and computer software; and construction in progress. The total decrease in the District s investment in capital assets (net of accumulated depreciation) for the current fiscal year was approximately 2.0 percent. Governmental Activities June 30, 2016 June 30, 2015 Land $ 22,956,312 $ 19,420,146 Construction in Progress - 13,378,821 Improvements Other Than Buildings, Net 1,162, ,873 Buildings and Fixed Equipment, Net 606,382, ,591,833 Furniture, Fixtures, and Equipment, Net 6,405,117 8,144,579 Motor Vehicles, Net 5,706,131 5,120,165 Property under Capital Lease 3,994,222 4,496,204 Audio Visual Materials and Computer Software, Net 535,543 1,256,447 $ 647,142,176 $ 660,286,068 be found in note 5 on page 36 of this report. Additional information on the District s capital assets can be found in note 2C of this report. Page 20

10 Long-Term Debt. At the end of the current fiscal year, the District had total long-term debt related to capital assets outstanding of $249,682,722 as follows: State Board of Education Bonds $ 7,233,000 Certificates of Participation 229,797,855 Capital Leases 4,636,867 Sales Tax Notes Payable 8,015,000 Total $ 249,682,722 During the current fiscal year, the District paid $51,957,605 for principal payments and premium amortization on existing long-term debt related to capital assets as follows: Scheduled Payments State School Bonds $ 852,000 Sales Tax Note Payable 3,930,000 Certificates of Participation Payable 15,785,000 2,370,864 Property under Capital Lease 1,669,741 Sub-total 24,607,605 Refunded COP 27,350,000 $ 51,957,605 Additional information on the District s long-term debt can be found in note 2H of the notes to the basic financial statements. Other Matters of Significance Factors Bearing on the District s Future At the time these financial statements were prepared, the District was aware of four existing circumstances that could significantly affect its financial future. Florida economic conditions continue to improve. Per student funding has almost returned to the level of fiscal year ; however, when the funding is adjusted for inflation, the current funding remains significantly less. Property values in fiscal year show an increase, the fourth consecutive year of gradual growth. State forecasts indicate property values will continue to show growth in the near future. Page 21

11 The District participates in a voter-approved one-cent discretionary infrastructure sales surtax (Sales Tax) in which the District receives one-third of the penny levied. The Sales Tax which is currently approved through 2017 was renewed by voters in November 2015 for an additional 15 years. The State has announced a proration of State funding for Fiscal Year , this will be the sixth consecutive year in which the State has failed to provide school districts with the full amount of earned funding. For the District, the State proration in Fiscal Year was $0.5 million, an amount somewhat less than in previous years. For that reason, the District will continue to closely monitor its reserve funds to protect programs from likely additional State proration in Fiscal Year Requests for Information This report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of the District s finances and to demonstrate compliance and accountability for its resources. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Chief Financial Officer, Lake County Schools, 201 West Burleigh Boulevard, Tavares, Florida Page 22

12 STATEMENT OF NET POSITION June 30, 2016 Primary Government Governmental Business-Type Total Component Activities Activities Units ASSETS Cash and Cash Equivalents $ 65,611,248 $ 1,317,817 $ 66,929,065 $ 32,135,467 Investments 26,495,185 26,495,185 1,129,350 Accounts Receivable 7,405,999 7,405, ,916 Prepaid Items 36,977 36, ,772 Due from Other Agencies 11,152,353 11,152, ,665 Inventories 2,285,424 2,285,424 Prepaid Insurance Costs 222, ,528 Other Currect Assets 990,360 Capital Assets: Land and Construction in Progress 22,956,312 22,956, ,427 Depreciable Capital Assets 884,846, ,846,743 6,059,155 Accumulated Depreciation (260,660,879) (260,660,879) (3,149,036) Other Non-Current Assets 2,799,510 TOTAL ASSETS $ 760,351,890 $ 1,317,817 $ 761,669,707 $ 41,656,586 DEFERRED OUTFLOWS OF RESOURCES Pension Costs $ 29,771,638 $ $ 29,771,638 $ 4,866,669 Net Carrying Amount of Debt Refunding 6,622,836 6,622,836 TOTAL DEFERRED OUTFLOWS OF RESOURCES $ 36,394,474 $ $ 36,394,474 $ 4,866,669 LIABILITIES Salaries and Benefits Payable $ 22,100,196 $ 20,437 $ 22,120,633 $ 486,049 Payroll Deductions and Withholdings 7,101,194 23,628 7,124,822 Accounts Payable 4,491,593 10,549 4,502, ,948 Other Expenses 97,993 Unearned Revenues 155, ,809 Deposits Payable 169, ,977 Due to Other Agencies 52,684 52,684 6,000,199 Estimated Insurance Claims Payable Long-Term Liabilities: Portion Due Within One Year 38,390,159 38,390,159 2,218,610 Portion Due After One Year: 356,299, ,299,112 13,699,232 TOTAL LIABILITIES $ 428,760,724 $ 54,614 $ 428,815,338 $ 22,612,031 DEFERRED INFLOWS OF RESOURCES Pension Costs $ 15,206,410 $ $ 15,206,410 $ 3,521,519 Deferred Revenue 50,137 50,137 TOTAL DEFERRED INFLOWS OF RESOURCES $ 15,256,547 $ $ 15,256,547 $ 3,521,519 NET POSITION Net Investment in Capital Assets $ 404,304,817 $ $ 404,304,817 $ 2,748,339 Restricted for: State Required Carryover Programs 189, ,772 Debt Service 1,131,450 1,131, ,005 Capital Projects 47,973,475 47,973,475 Special Revenue - Food Service 12,356,555 12,356,555 Scholarships, Endowments, and Other Programs 7,756,582 Unrestricted (113,226,976) 1,263,203 (111,963,773) 9,682,779 TOTAL NET POSITION $ 352,729,093 $ 1,263,203 $ 353,992,296 $ 20,389,705 The accompanying notes to financial statements are an integral part of this statement. Page 23

13 STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2016 Functions/Programs Expenses Charges for Services Program Revenues Operating Grants and Contributions Primary Government Governmental Activities: Instruction $ 203,632,327 $ $ Pupil Personnel Services 17,203,453 Instructional Media Services 3,465,386 Instruction and Curriculum Development Services 11,637,502 Instructional Staff Training Services 9,970,986 Instruction Related Technology 1,297,717 Board of Education 761,325 General Administration 1,888,123 School Administration 18,103,177 Facility Services 6,087,331 Fiscal Services 1,855,957 Food Services 19,176,323 4,133,713 16,293,289 Central Services 6,207,037 Pupil Transportation Services 15,844, ,741 Operation of Plant 25,263,904 Maintenance of Plant 8,052,999 Administrative Technology Services 3,593,785 Community Services 103,969 Interest on Long-Term Debt 9,894,088 Unallocated Depreciation Expense 21,178,576 Total Governmental Activities 385,218,496 4,682,454 16,293,289 Total Business-Type Activities 2,860,342 2,994,167 Total Primary Government $ 388,078,838 $ 7,676,621 $ 16,293,289 Component Units Charter Schools $ 44,255,322 $ 3,714,892 $ 3,293,352 Educational Foundation 2,218,413 2,530,169 Total Component Units $ 46,473,735 $ 3,714,892 $ 5,823,521 General Revenues: Taxes: Property Taxes, Levied for Operational Purposes Property Taxes, Levied for Capital Projects Local Sales Taxes Grants and Contributions Not Restricted to Specific Programs Investment Earnings Miscellaneous Total General Revenues Change in Net Position Net Position - July 1, 2015 Net Position - June 30, 2016 The accompanying notes to financial statements are an integral part of this statement Page 24

14 (Continued) Net (Expense) Revenue and Changes in Net Assets Capital Primary Government Component Grants and Governmental Business-Type Total Units Contributions Activities Activities $ $ (203,632,327) $ $ (203,632,327) $ (17,203,453) (17,203,453) (3,465,386) (3,465,386) (11,637,502) (11,637,502) (9,970,986) (9,970,986) (1,297,717) (1,297,717) (761,325) (761,325) (1,888,123) (1,888,123) (18,103,177) (18,103,177) 1,038,270 (5,049,061) (5,049,061) (1,855,957) (1,855,957) 1,250,679 1,250,679 (6,207,037) (6,207,037) (15,295,790) (15,295,790) (25,263,904) (25,263,904) (8,052,999) (8,052,999) (3,593,785) (3,593,785) (103,969) (103,969) 1,209,698 (8,684,390) (8,684,390) (21,178,576) (21,178,576) 2,247,968 (361,994,785) (361,994,785) - 133,825 $ 2,247,968 (361,994,785) $ 133,825 $ (361,860,960) $ $ $ (37,247,078) 311,756 $ $ (36,935,322) 100,319, ,319,737 26,413,676 26,413,676 14,028,543 14,028, ,603, ,603,099 38,315, , ,988 9,623,905 9,623, , ,188, ,188,948 39,019,633 12,194, ,964 12,327,988 2,084, ,535,069 1,129, ,664,308 18,305,394 $ 352,729,093 $ 1,263,203 $ 353,992,296 $ 20,389,705 Page 25

15 BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2016 General Fund Special Revenue Food Service Fund ASSETS Cash $ 29,277,320 $ 12,014,689 Investments 38,782 Accounts Receivable 7,406, Due from Other Funds 2,252,334 Due from Other Agencies 1,599, ,916 Inventories 1,571, ,350 Prepaid Items 36,977 TOTAL ASSETS $ 42,182,994 $ 13,282,063 Liabilities Salaries and Benefits Payable $ 17,845,240 $ 224,558 Payroll Deductions and Withholdings 6,752, ,306 Accounts Payable 2,018, ,791 Due to Other Funds Deposits Payable ,853 Due to Other Funds Due to Other Agencies 21,448 Total Liabilities 26,637, ,508 Deferred Inflow of Resources Deferred Revenues 26,164 Total Deferred Inflow of Resources 26,164 Fund Balances Nonspendable 1,608, ,350 Spendable: Restricted 189,772 11,657,205 Assigned 1,557,963 Unassigned 12,162,931 Total Fund Balances 15,518,916 12,356,555 TOTAL LIABILITIES, DEFERRED INFLOW OF $ 42,182,994 $ 13,282,063 RESOURCES AND FUND BALANCES The accompanying notes to financial statements are an integral part of this statement. Page 26

16 (Continued) Capital Projects - Other Total Other Capital Governmental Governmental Projects Fund Funds Funds $ 6,172,610 $ 12,867,786 $ 60,332,405 26,241, ,845 26,495,185 7,406,447 2,252,334 3,467,078 5,180,349 10,815,312 2,270,623 36,977 $ 35,881,246 $ 18,262,980 $ 109,609,283 $ $ 1,211,889 $ 19,281, ,863 7,098,007 4,426 1,303,882 3,726, ,977 2,252,334 2,252,334 28,934 50,382 4,426 5,010,902 32,578,750 23,973 50,137 23,973 50,137 2,307,600 35,876,820 13,228,105 60,951,902 1,557,963 12,162,931 35,876,820 13,228,105 76,980,396 $ 35,881,246 $ 18,262,980 $ 109,609,283 Page 27

17 DISTRICT SCHOOL BOARD OF LAKE COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION FOR THE FISCAL YEAR ENDED Total Fund Balances - Governmental Funds $76,980,396 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets, net of accumulated depreciation, used in governmental activities are not financial resources and, therefore, are not reported as assets in the governmental funds. Non-Depreciable Assets 22,956,312 Depreciable Assets 624,185, ,142,176 Unamortized Deferred Loss of Bond Refundings are not expensed in the government-wide statements, but are reproted as deferred outflows and amortized over the life of the debt. 6,622,836 Debt Issuance Costs of Bond Refundings are not expensed in the government-wide statements, but are reproted as deferred inflows and amortized over the life of the debt. 222,528 Internal Service Funds are used by management to charge the costs of it's self-funded employee health insurance and printshop to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. Total Assets - Internal Service Funds 5,630,688 Less, Total Liabilities - Internal Service Funds (3,745,488) 1,885,200 Premiums paid on long-term debt issuances are reported as revenues in the governmental funds but as unamortized premiums in the government-wide statements and amortized over the life of the debt. (17,847,855) Long-term liabilities are not due and payable in the current period and, therefore are not reported as liabilities in the governmental funds. Long term liabilities at year-end consist of: Bonds Payable (7,233,000) Certificates of Participation Payable (211,950,000) Capital Lease Payable (4,636,868) Note Payable (8,015,000) Compensated Absences Payable (16,157,799) Other Postemployment Benefits Payable (10,337,448) Net Pension Liability (118,511,301) (376,841,416) Deferred Pension Costs are not expensed in the government-wide statements, but are reported as deferred inflows and outflows and amortized over the life of the debt. Deferred Outflows Deferred Inflows Deferred Pension Costs FRS - Defined Benefit Program 21,288,755 (15,181,646) FRS - Health Insurance Subsidy 8,482,883 (24,764) 29,771,638 (15,206,410) 14,565,228 Total Net Position - Governmental Activities $352,729,093 The accompanying notes to financial statements are an integral part of this statement. Page 28

18 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Fiscal Year Ended June 30, 2016 Revenues General Fund Special Revenue Food Service Fund Intergovernmental: Federal Direct $ 309,923 $ Federal Through State 1,348,043 16,024,249 State 191,022, ,040 Local: Ad Valorem Taxes 100,319,737 Local Sales Tax Impact Fees Food Service 4,133,713 Other Local Revenue 5,038,672 19, ,039,136 20,416,291 Instruction 200,253,272 Pupil Personnel Services 14,298,006 Instructional Media Services 3,506,079 Instruction and Curriculum Development Services 5,197,553 Instructional Staff Training Services 5,495,847 Instruction Related Technology 1,312,956 Board of Education 770,265 General Administration 918,071 School Administration 18,315,756 Facility Services 475,393 Fiscal Services 1,877,751 Food Services 19,401,504 Central Services 6,244,776 Pupil Transportation Services 15,996,846 Operation of Plant 25,559,034 Maintenance of Plant 8,147,562 Administrative Technology Services 3,635,986 Community Services 102,006 Fixed Capital Outlay: Facilities Acquisition and Construction Other Capital Outlay 560, ,715 Debt Service: Principal Interest and Fiscal Charges Total Expenditures 312,667,863 20,227,219 Excess (Deficiency) of Revenues Over Expenditures (14,628,727) 189,072 Other Financing Sources (Uses) Sale of Capital Assets Premium on Sale of Bonds Refunding Bonds Issued Payments to Refunding Escrow Agent Transfers In 13,969,962 Transfers Out (861,605) Total Other Financing Sources (Uses) 13,108,357 Net Change in Fund Balances (1,520,370) 189,072 Fund Balances, July 1, ,039,286 12,167,483 Fund Balances, June 30, 2016 $ 15,518,916 12,356,555 The accompanying notes to financial statements are an integral part of this statement Page 29

19 (Continued) Capital Projects- Other Total Other Capital Governmental Governmental Projects Fund Funds Funds $ $ 41,757 $ 351,680 21,190,643 38,562, ,110 2,721, ,148,154 26,413, ,733,413 14,028,543 14,028,543 13,315,564 13,315,564 4,133, ,236 6,833 5,242,030 13,657,910 64,402, ,516,032 5,770, ,023,510 3,107,461 17,405,467 3,506,079 6,576,604 11,774,157 4,592,225 10,088,072 1,312, , ,224 1,910,295 18,315, ,393 1,877,751 19,401,504 35,148 6,279,924 33,742 16,030,588 1,535 25,560,569 8,147,562 3,635,986 3, ,190 4,207,044 7,938,638 12,145, ,039 1,506,458 22,190,554 22,190,554 11,103,686 11,103,686 4,207,044 62,465, ,567,404 9,450,866 1,937,417 (3,051,372) 27,968,159 27,968,159 (27,671,843) (27,671,843) 30,717,942 44,687,904 (9,672,210) (34,180,558) (44,714,373) (9,672,210) (3,166,300) 269,847 (221,344) (1,228,883) (2,781,525) 36,098,164 14,456,988 79,761,921 $ 35,876,820 $ 13,228,105 $ 76,980,396 Page 30

20 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED Net Change in Fund Balances - Governmental Funds $ (2,781,525) Capital outlays are reported in the governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of net capital outlays that exceed the depreciation expense ($21,178,576) (13,720,213) Premiums and issuance costs on new debt issues are reported when issued as other financing sources and other fiscal charges in the governmental funds, but are amortized over the life of the debt in the statement of activities. Deferred Charges: Current Year 671,798 Less Prior Year 761,013 Net reduction in expenses from Deferred Charges (89,215) Unamortized Premiums/ Deferred Loss: Current Year (17,847,855) Less Prior Year (20,218,719) Net increase in expenses from Unamortized Premiums 2,370,864 Unamortized Deferred Loss Current Year 6,622,836 Less Prior Year 6,821,803 Net increase in expenses from Deferred Loss (198,967) Other postemployment benefit costs are recorded in the Governmental Funds under the pay-as-you-go method, but under the full accural method in the Government-Wide Governmental Activities. Current year accruals totaled: (667,634) Pension Costs are recorded in the Governmental Funds under the pay-as-you-go method, but under the full accural method in the Government-Wide Governmental Activities. Current year accruals totaled: 4,354,939 Repayments of long-term liabilities are expenditures in the governmental funds, but repayments reduce long-term liabilities in the statement of net assets. Notes Payable 3,930,000 Bonds Payable 852,000 Certificates of Participation 15,785,000 Obligations under Capital Lease 1,669,739 22,236,739 In additional to the scheduled repayment of long-term liabilities shown above, principal was further increased through the refunding of existing debt New Principal Issued (27,820,000) Refunded Principal Retired 27,350,000 (470,000) Internal service funds are used by management to charge the cost of certain activities, such as insurance to individual funds. The changes in net position of internal service funds is reported with governmental activities. Internal Service Funds - Change in Net Position 626,645 In the statement of activities, the cost of compensated absences is measured by the amounts earned during the year, while in the governmental funds expenditures are recognized based on the amounts actually paid for compensated absences. This is the net amount of compensated absences earned less the amount paid in the current period. 532,391 Change in Net Position - Governmental Activities $ 12,194,024 The accompanying notes to financial statements are an integral part of this statement. Page 31

21 STATEMENT OF NET POSITION PROPRIETARY FUNDS June 30, 2016 Business-Type Activities Extended Learning Center Governmental Activities Internal Service Funds ASSETS Current Assets: Cash and Cash Equivalents $ 1,317,817 $ 5,278,843 Accounts Receivable 3 Due from Other Agencies 337,041 Inventories 14,802 Total Current Assets 1,317,817 5,630,689 Total Assets $ 1,317,817 $ 5,630,689 Current Liabilities: Accrued Salaries & Benefits $ 20,437 $ 186 Payroll Deductions & Withholding 23,628 3,188 Accounts Payable 10, ,983 Due to Other Funds Unearned Revenues 155,809 Insurance Claims Payable 2,818,323 54,614 3,745,489 Total Liabilities 54,614 3,745,489 Unrestricted 1,263,203 1,885,200 Total Net Position 1,263,203 1,885,200 TOTAL LIABILITIES AND NET POSITION $ 1,317,817 $ 5,630,689 The accompanying notes to financial statements are an integral part of this statement. Page 32

22 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED Business-Type Activities Extended Learning Center Governmental Activities Internal Service Funds OPERATING REVENUES Charges for Services $ 2,994,167 $ 44,155,467 2,994,167 44,155,467 OPERATING EXPENSES Salaries 1,722, ,540 Employee Benefits 506,026 43,520 Purchased Services 53, ,121 Energy Servcies 7,109 16,554 Materials & Supplies 62, ,371 Capital Outlay 115, ,972 Other Expenses 16,922 42,650,059 Total Operating Expenses 2,483,200 43,951,137 Operating Income 510, ,330 Non-Operating Revenues Other Misc Income 18,604 Interest Income Income(Loss) before Transfers 511, ,034 Transfers (377,142) 403,611 Change in Net Position 133, ,645 Total Net Position, June 30, ,129,239 1,258,555 Total Net Position, June 30, 2016 $ 1,263,203 $ 1,885,200 The accompanying notes to financial statements are an integral part of this statement. Page 33

23 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED Business-Type Activities Extended Learning Center Program Governmental Activities Internal Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Services $ 2,994,167 $ 43,949,013 Cash Payments to Suppliers for Goods and Services (186,735) (43,252,721) Cash Payments to Employees for Services (2,184,536) (197,060) Net Cash Provided (Used) by Operating Activities 622, ,232 CASH FLOWS FROM INVESTING FINANCING ACTIVITIES Other Misc Income 18,604 Interest Income Net Cash Provided by Investing Activities ,704 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers In/Out (377,142) 403,611 Net Cash Provided (Used) by Noncapital Financing Activities (377,142) 403,611 Net Increase (Decrease) in Cash and Cash Equivalents 245, ,547 Cash and Cash Equivalents, Beginning 1,071,924 4,361,090 Cash and Cash Equivalents, Ending $ 1,317,817 $ 5,282,637 Reconciliation of Operating Loss to Net Cash Used by Operating Activities: Operating Income (Loss) $ 510,967 $ 204,330 Adjustments to Reconcile Operating Loss to Net Cash Used by Operating Activities: Changes in Assets and Liabilities: Decrease in Accounts Receivable 149,227 (167,762) Decrease in Inventories Increase in Due from Other Agencies Increase in Accrued Salaries & Benefits Increase in Payroll Deductions & Withholding 9,728 Decrease in Accounts Payable (5,733) 369,274 Decrease in Claims Payable 59,734 Decrease in Due to Other Funds Decrease in Unearned Revenue (41,293) 33,656 Total Adjustments 111, ,902 Net Cash Provided/(Used) by Operating Activities $ 622,896 $ 499,232 The accompanying notes to financial statements are an integral part of this statement. Page 34

24 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS June 30, 2016 Private-Purpose Trust Funds Agency Funds ASSETS Cash and Cash Equivalents $ 200,903 $ 2,918,702 TOTAL ASSETS $ 200,903 $ 2,918,702 LIABILITIES Internal Accounts Payable $ $ 2,918,702 Total Liabilities $ 2,918,702 Net Position Assets Held in Trust for Scholarships and Other Purposes 200,903 TOTAL NET POSITION $ 200,903 The accompanying notes to financial statements are an integral part of this statement. Page 35

25 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Fiscal Year Ended June 30, 2016 ADDITIONS Private-Purpose Trust Funds Investment Earnings: Interest, Dividends, and Other $ 903 DEDUCTIONS Other Expenses Change in Net Position 1 Net Position, July 1, ,902 Net Position, June 30, 2016 $ 200,903 The accompanying notes to financial statements are an integral part of this statement. Page 36

26 NOTES TO THE BASIC FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The District School Board of Lake County, Florida (District) has direct responsibility for the operation, control and supervision of District schools and is considered a primary government for financial reporting. The District is considered part of the Florida system of public education, operates under the general direction of the Florida Department of Education, and is governed by State laws and State Board of Education (SBE) rules. The governing body of the District is the Lake County District School Board (School Board), which is composed of five elected members and has direct responsibility for operation, control, and supervision of District schools. The appointed Superintendent of Schools is the executive officer of the School Board. Geographic boundaries of the District correspond with those of Lake County. Component Units Criteria for determining if other entities are potential component units that should be reported within the District s basic financial statements are identified and described in the Governmental Accounting Standard Board s (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and The application of these criteria provides for identification of any entities for which the District is financially accountable and other organizations that the nature and significance of their relationship with the District are such that exclusion would cause the District s basic financial statements to be misleading or incomplete. The District used guidance provided in a Florida Department of Education memorandum, dated October 8, 2012, in the application of these criteria for identification of any entities for which the District is financially accountable and has a financial benefit or burden relationship present and other organizations for which the nature and significance of their relationship with the District are such that exclusion would cause the District s basic financial statements to be misleading or incomplete. The Florida Department of Education has directed that all Charter Schools be reported as component units of the District. Based on the application of the above criteria, the following component units are included within the District s reporting entity: Blended Component Unit. The Financing Corporation for the School Board of Lake County, Florida, Inc. (Financing Corporation) was formed to facilitate financing for the acquisition of facilities and equipment, as further discussed in Note 9. The governing board of the Financing Corporation is the Lake County District School Board. Due to Page 37